11/03/2010 @ 1:20PM

Henry Ford, William Sarnoff And Leadership Today

Tony Mayo teaches a course at Harvard Business School called Great Business Leaders: The Importance of Contextual Intelligence. He also is director of the school’s Leadership Initiative, an interdisciplinary program that promotes cutting-edge research toward the development of new, better courses on leaders and leadership. He’s the co-author of In Their Time: The Greatest Business Leaders of the 20th Century, of Paths to Power: How Insiders and Outsiders Shaped American Business Leadership, and of the new Entrepreneurs, Managers and Leaders: What the Airline Industry Can Teach Us About Leadership. Those books all draw on the riches in the Great American Business Leaders database, which Mayo and his colleague Nitin Nohria created for the Leadership Initiative.

I recently talked to Mayo about what he has learned about leadership today from his studies of the past, and about the strengths and weaknesses of business education today. The interview is appearing in two parts; click here for Part 2.

Varghese: What is the Leadership Initiative, and how did it come about?

Mayo: It’s chaired by professor Linda Hill, and it was organized to be a catalyst for research on leaders and leadership, so we could design effective leadership development programs for the 21st century. The goal is to support Harvard Business School’s overarching mission to educate leaders who make a difference in the world. Throughout our work, we seek to bridge the gap between the theory and practice of leadership.

What main conclusions about leadership have you drawn from what you’ve learned while creating the Great American Business Leaders database?

The Leadership Initiative covers three avenues of research: legacy leadership, emerging leadership and global leadership. We developed the Great American Business Leaders of the 20th Century database as part of our flagship research on legacy leadership. Professor Nitin Nohria and I began it as part of an effort to understand historical business leadership patterns. It includes information on 1,000 chief executives and founders of American-based companies. Our initial goal was to develop a canon of business leadership that could help us better understand the evolution of businesses and specifically of the individuals who shaped them. As we examined our database of great business leaders by decade, we became excited about the notion of context-based study. We’ve tried to understand how business executives were able to achieve success in the contexts of the times when they lived and worked.

What is contextual intelligence, and why is it important?

For professor Nohria and me, contextual intelligence means the ability to understand the macro level factors that are at play at a given time. We have looked at six contextual factors that shaped business during the last century and continue to shape it now: government regulation, labor, globalization, technology, demography and social mores. Within each decade of the 20th century, these six factors ebbed and flowed, coalescing in unique combinations. A business executive’s ability to make sense of the contextual framework and harness its power has often made the difference between success and failure.

Contextual intelligence is the ability to seize the zeitgeist of the time to create, maximize or transform a business opportunity. Certain times have demanded specific management orientations to produce and sustain thriving businesses, and great CEOs and founders have been skilled at accurately assessing when to adapt. For many, however, this adaptation process has become an almost impossible challenge. That was certainly apparent for both Henry Ford at
Ford Motor
and David Sarnoff at RCA, the Radio Corp. of America.

Both Ford and Sarnoff made tremendous contributions to business and society as the heads of their respective companies. Ford’s ability to create a highly efficient production operation was related in no small way to his dogmatic and hard-nosed management style. His early successes in that arena bred an air of invulnerability that would be treacherous for him in later years. Believing that his most significant advisor should be himself, he failed to recognize the transformational changes that were happening to both the automobile industry and the buying public. This lack of awareness or even interest in the opinions and thoughts of others became a tremendous and unnecessary but ultimately inevitable folly for Ford.

Only a generation later, Sarnoff repeated some of the same blunders. Understanding how to tap into the power of radio and then television, Sarnoff was able to build RCA into one of the most formidable and competitive companies in the world. His constant focus on technology and its implications within the radio and television industries enabled RCA to make dramatic leaps in its products and services, especially through its ownership of NBC, the National Broadcasting Co. Technology reigned in the early days of both mediums, but as the technology matured, content took center stage.

Sarnoff was unable, and seemingly unwilling, to recognize that shift. He was also unwilling to recognize the technical superiority of others in the industry, especially of the electronics industry in Japan. Instead of building on the success of others, he doggedly pursued a flawed technological investment path. This blind faith in himself and his idea of technology eventually sealed RCA’s fate, a fate that has left the once-heralded brand almost unknown today.

So both Ford and Sarnoff failed to adjust their management styles during pivotal moments in their companies’ histories.